What's Wrong With This Picture?

Plunging bond yields, depressed VIX and record stock indexes don't fit—until you factor in the Fed.

Two aspects of the current investment landscape have befuddled the best and brightest this year: the steady decline in bond yields and the collapse of volatility. Could the two be opposite sides of the same coin?

Amid much head scratching, the yield of the benchmark 10-year U.S. Treasury note fell to 2.43%, down 60 basis points (0.6 percentage point) from year-end and the lowest since June 2013. Meanwhile, the VIX -- the CBOE...